During development, cells undergo dramatic changes in their morphology. By affecting contact geometry, these morphological changes could influence cellular communication. However, it has remained unclear whether and how signaling depends on contact geometry. This question is particularly relevant for Notch signaling, which coordinates neighboring cell fates through direct cell-cell signaling. Using micropatterning with a receptor trans-endocytosis assay, we show that signaling between pairs of cells correlates with their contact area. This relationship extends across contact diameters ranging from micrometers to tens of micrometers. Mathematical modeling predicts that dependence of signaling on contact area can bias cellular differentiation in Notch-mediated lateral inhibition processes, such that smaller cells are more likely to differentiate into signal-producing cells. Consistent with this prediction, analysis of developing chick inner ear revealed that ligand-producing hair cell precursors have smaller apical footprints than non-hair cells. Together, these results highlight the influence of cell morphology on fate determination processes.